IL&FS headquarters in Mumbai sold to Brookfield group

If you are in Mumbai and driving through the business district of Bandra Kurla Complex (BKC), one landmark you would not miss is the imposing IL&FS Towers. In a way, the IL&FS Tower was indicative of the big shift that happened in Mumbai over 20 years ago as large businesses shifted to the suburbs.

ICICI Bank and IL&FS were among the first to shift their offices in the reclaimed land in BKC, which went on to become the priciest piece of realty.

In a way, the sale of the IL&FS headquarters at Bandra Kurla Complex to Brookfield for a consideration of Rs.1,080 crore marks the end of the journey for IL&FS.
 

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Once touted as the company that would take Indian infrastructure to the next level of maturity, IL&FS had to be dissolved in 2018 as it struggled under a pile of debt and an inability to fund its repayments with fresh borrowings. The tightness in money markets had been the Waterloo for IL&FS.

Anyways, back to the deal. Reportedly, the letter of Intent has been handed over to Brookfield and the asset will be handed over to Brookfield during the current year itself. This will give a small boost to the debt recovery process at IL&FS.

The IL&FS Towers has a total leasable area of 4.5 lakh SFT. The top 3 floors were occupied by offices of IL&FS Group which will now be vacated that the deal has already been consummated.
 

The IL&FS building sits on land admeasuring 12,550 square metres and the buildings in that vicinity command average monthly rentals of Rs.230 to Rs.300 per SFT.

Of course, since the building itself is more than 22 years old, Brookfield will have to bring in capital to upgrade the existing infrastructure. The built up area of the entire IL&FS Towers is close to 322,268 SFT and it remains to be seen how Brookfield tweaks this property franchise.

One thing that is not clear is whether Brookfield will include this property in its REITS portfolio. Brookfield, incidentally, already has a listed REITS on the NSE and being a commercial property, IL&FS would perfectly fit into the goals of the REIT fund.

To begin with, Brookfield may look to renovate the building to world class levels to attract top-dollar global corporates as tenants. IL&FS will eventually resolve about 60% of its pending debt.